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What it is (and what it isn't)The Initial Quality Study (often referred to as the IQS), an annual survey conducted by McGraw-Hill(NYSE: MHP) unit J.D. Power, is often held up as the gold standard of a brand's "quality," but the truth is a little more complicated than that. In a nutshell, the IQS is a survey that asks new-car buyers about problems they may have had in the first 90 days of ownership.

It's very different from something like Consumer Reports ratings, which look at durability -- how a vehicle holds together over several years. By focusing on the first 90 days, the IQS is more likely to capture problems related to the car's assembly, rather than to its design.

Another factor worth noting: The IQS ranks cars by brand, not manufacturer. This is important because, to some extent, the responses to the IQS surveys probably reflect customers' experiences with their dealers as well as with the vehicles themselves. Consider: Luxury brands often lead the IQS, as they did this year, sometimes significantly ahead of their mass-market cousins. For instance, Toyota (the brand) placed 21st in this year's survey, but Lexus -- Toyota's luxury brand, which sells vehicles built on Toyota platforms in Toyota factories -- placed fourth.

In fact, the top four brands were all luxury brands: Porsche, Acura, Mercedes-Benz, and Lexus. Given that luxury-brand dealers tend to go to greater lengths to keep their customers smiling than do mass-market brands, how much of the IQS is really measuring "quality" versus "customer satisfaction"?

Hard to say. But in that light, Ford's fifth-place finish -- right after the four aforementioned high-zoot brands -- is arguably even more impressive.

America wins!Ford wasn't the only American company to do well. J.D. Power's press release from Thursday trumpeted the fact that American brands, in the aggregate, led imports in quality for the first time in the IQS's 24-year history, with General Motors and most of Chrysler's brands showing solid gains.

But Ford was clearly the shining star of the report. Ford's score in the ICQ -- expressed as problems per 100 vehicles -- has improved steadily for the past nine years, said J.D. Power, and Ford's Lincoln brand also made it into the top 10, a sizeable jump from past years.

Toyota's real quality problemBut what was behind Toyota's stunning fall from sixth to 21st place? Not surprisingly, the company's extensive recalls were a key factor: While J.D. Power traditionally withholds details about makes and models that don't do well, a company vice president did tell The New York Times that owners of Toyota's recalled vehicles seemed more likely "to report anything that seemed odd," and that "the vehicles that weren't recalled actually showed some improvement."

To my mind, that's further evidence that the IQS is more about buyer perceptions and short-term customer satisfaction than it is about the vehicles themselves. And that suggests that new-car shoppers should stick with other measures of "quality" -- those Consumer Reports surveys, for instance -- if they're concerned about choosing an especially reliable model of car.

But for those of us looking at these companies as investments, the latest iteration of the IQS does give us a couple of takeaways. Clearly, Toyota's very public recall fiascos have had a measurable impact on even its own customers' perceptions of its vehicles, suggesting damage that is likely to linger for some time.